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Nobody enjoys dealing with things they don’t understand—especially when they have to pay for it.
For example, can you imagine putting yourself into debt just for the privilege of learning a bunch of facts and figures that you’ll probably never use again? (Oh wait … sorry college students.)
Thankfully, Quotehound has you covered when it comes to understanding car insurance.
Below you can find a quick and easy introduction to the world of automobile insurance, including what it is, why it’s necessary, and how to find the best deals so you can balance the right coverage for the best price.
At the most basic level, automobile insurance is an agreement between you and your insurance company that provides a benefit for both parties.
The benefit for your insurance company is that it receives the money from your insurance premiums every month. The benefit for you as a car owner and driver is that you receive financial support and other types of assistance if you are involved in an automobile accident.
In other words, if you do get in an accident, you’re not alone; you’re covered.In fact, in most cases, your car insurance policy will make sure you pay only a fraction of the total cost of an auto accident—including medical costs and the cost to repair or replace the vehicles involved.
Best of all, you will receive that support even if that accident was your fault.There are several different types of automobile insurance that can be included in an insurance policy, but these are among the most common:
Also known as PIP, personal injury protection covers any medical costs that may be incurred by you or your passengers as a result of an accident. PIP is required in some states and optional in others.
In a perfect world, everyone would have more than enough car insurance. However, we don’t live in a perfect world. Therefore, you are at risk of being stuck with a major bill if you are hit by a driver who has no insurance (uninsured) or not enough insurance to cover the costs (underinsured). Uninsured and Underinsured Motorist coverage protects you against that risk.
When you have collision coverage, you receive money to repair or replace your car if you’re involved in an accident—even if the accident is your fault. Most policies require you to pay a specified sum of money toward the repairs first, which is called the “deductible.” Once you’ve met the deductible, the insurance company pays for the rest of the damages.
Comprehensive coverage is called “comprehensive” because it applies to anything that might happen to your car other than an accident—theft, vandalism, falling rocks or branches, storm damage, flood damage, and more
Liability coverage pays for damages that occur in an accident when you are at fault. Importantly, this includes both medical and property costs, and it includes damages suffered by both you and any other parties involved in the accident. Liability insurance is critical because it protects you from lawsuits if you are sued after an accident.
